Innovation Economy

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Thursday, January 22, 2009

GM Throws A123 From a Moving (Hybrid) Car

I'd missed this news from last week's North American International Auto Show, until an eagle-eyed reader called my attention to it: GM has chosen Korean-made batteries from LG Chem, instead of batteries from A123 Systems of Watertown, Mass., for the first generation of its Chevy Volt plug-in hybrid.

From the AP:

LG Chem CEO Peter Kim said the company may eventually build cells in Michigan, and it anticipates that its U.S. subsidiary, Compact Power Inc., will add to its 100-person work force in Troy, Mich.

...{Volt vehicle line director Tony] Posawatz said GM chose LG Chem because of its flat-cell design that dissipates heat better and stores more energy than competitors' cylinder-shaped cells.The competition from A123 Systems Inc. of Watertown, Mass., was very capable, Posawatz said, but "one has to be the lead."

The Christian Science Monitor offers more detail on the decision, in this Q&A with Robert Kruse, a GM executive director for hybrid vehicles. Kruse says:

"...We selected LG as the cell source for Gen-one Volt; and we are also very intrigued and attracted to some of what A123 has to offer and are continuing to do advanced development with A123 for future applications – just not Gen-one Volt.

"A123 is still sort of a startup, they're still ramping up, and A123 has been specializing mostly in ...cylindrical cells, which are good with power tools and stuff. What we need here is prismatic, which is flat cells. And LG Chem is just farther along," he said.

– GM may have bought itself a problem, too. It has taxpayer loans now and despite all its plans to build battery labs and plants in Michigan and around the world, it can’t escape that fact it selected a Korean and not an American company to make the key component for its batteries. Could this be a problem for the incoming president whose number one priority is getting Americans back to work?

– What did A-123 know when did they know it? Could its executives have been thinking on Jan. 7 [when they applied for a $1.84 billion government loan to build a new plant] that it was going to be GM’s key battery partner? Was the announcement a Hail Mary pass to convince GM that it would have the manufacturing prowess and capability to operate in the giant auto maker’s back yard? Did GM chose LG Chem in the 11th hour?

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